Indonesia urges Brazil, Vietnam to cut coffee supply

JAKARTA (JP): Disappointed with the failure of the world's coffee retention plan, Indonesia's coffee exporters have urged major producing countries Brazil and Vietnam to limit coffee supplies onto the international market in an effort to prop up prices.

Vice chairman of the Association of Indonesian Coffee Exporters (AEKI) Nuril Hakim said on Thursday that a supply reduction from the two major coffee producing countries was crucial to helping ease a protracted market glut.

"As the world's retention plan is failing, we will ask Brazil and Vietnam to reduce their supply onto the international market so coffee prices can move up," Nuril was quoted by Antara as saying.

Brazil and Vietnam are the world's largest coffee producers, as well as exporters, producing some 1.95 million tons and 720,000 tons a year respectively which accounts for 38 percent of the world's total coffee output of 6.84 million tons.

Nuril said the association would insist on the supply reduction during the upcoming meeting of the Association of Coffee Producing Countries (ACPC) to be held in London next September.

Nuril did not specify as to how far Brazil and Vietnam must limit their coffee supplies, saying only that they should be curtailed "until supply and demand on the international coffee market have reach their equilibrium level."

In addition to the reduction, the association would also lodge proposal with the International Coffee Organization to help finance the country's campaign to boost domestic coffee consumption, Nuril said.

Increasing domestic consumption was another alternative for lessening the pressure on coffee prices, Nuril said.

"Indonesia's coffee consumption level is very low at 0.6 kilograms per capita per year. We want to raise it to one kilogram," Nuril said.

The association expected the above measures to be more effective in raising coffee price than the failed retention plan.

"The coffee retention plan is still viable if the retained coffee output is as much as 50 percent, not 20 percent as required by ACPC recently, given the massive supplies on the international market," Nuril said.

But, according to Nuril, such a recommendation had been turned down by major coffee producers like Brazil and Columbia during ACPC's last meeting in May.

Nevertheless, Nuril said that Indonesian exporters had adopted a self-financed "voluntary retention" scheme by retaining some 60,000 tons of its stocks in a bid to help lift prices.(03)